[B]Cablevision's Newsday bid the favorite after Murdoch exits[/B]
9:21 PM EDT, May 10, 2008
Digg Del.icio.us Facebook Fark Google Newsvine Reddit Yahoo Print Reprints Post comment Text size: This story was reported by Mark Harrington, James T. Madore, Ellen Yan and Thomas Maier. It was written by Harrington.
Tribune Co. and Cablevision Systems Corp. Saturday appeared poised to strike a $650-million deal for Newsday after presumptive front-runner Rupert Murdoch exited the stage, according to people familiar with the negotiations.
The sources said a deal could be announced as early as Monday. "Cablevision appears to have won," said one of the sources, largely because its bid was $70-million higher than that of Murdoch's News Corp. and a third bidder Daily News owner Mortimer Zuckerman.
These developments come just days after Murdoch boasted to Wall Street analysts that Bethpage-based Cablevision would not "prevail." Saturday, News Corp. spokeswoman Teri Everett said the company dropped its bid because it "became uneconomical."
It remained unclear whether Murdoch would reconsider his withdrawal, how Zuckerman would respond to developments or whether another party might enter the negotiations. One person familiar with the Tribune-News Corp. talks said, "Rupert left because it wasn't going his way and he didn't want to be seen as losing out. He wanted to pull out before anything was done in public."
Prior to purchasing Dow Jones & Co., the publisher of The Wall Street Journal, last year, Murdoch threatened several times to rescind his $5-billion bid when the controlling Bancroft family tried to get more money and raised objections about his brand of journalism. He didn't formally back out of the deal, and ultimately bought the company for his price.
Spokespeople for Cablevision, Tribune and the Daily News declined comment. Dennis FitzSimons, the former Tribune chief executive who is reportedly advising Cablevision, did not respond to an inquiry seeking comment.
News of Murdoch's pullout surprised union officials who had been expecting him to announce he'd finalized the deal early next week.
Dennis Grabhorn, president of the Graphic Communications Conference, Local 406, which represents unionized Newsday editorial, printing press and delivery workers, said officials at GCC Local 2, representing Post workers, told him they had met with News Corp. officials on Friday and were assured Murdoch's bid would succeed.
A source close to the Daily News said there had been an expectation Zuckerman would make a second "pitch" for Newsday this weekend. The Daily News, said the source, "couldn't afford to lose to Murdoch." It was unclear Saturday night whether Zuckerman was still interested in Newsday.
Cablevision's high bid is said to be the outgrowth of a long ambition by the cable giant to own Newsday, with a plan to capitalize on its content, readership and ability to sell advertising.
Cablevision chairman Charles Dolan and his son, chief executive James Dolan, traveled to Chicago 10 days ago to hand deliver the top bid for Newsday to Tribune chief executive Sam Zell, a person familiar with the offer said. The Dolans are said to see in Newsday "excellence in media and excellence in advertising sales."
Cablevision would not be the first cable TV company to own a newspaper. Atlanta-based Cox Enterprises, owner of a vast cable TV, radio and broadcast TV empire, also owns the Dayton Daily News, the Atlanta Journal-Constitution, and 15 other daily newspapers.
A Cablevision-Newsday combination is expected to benefit from an ability to reach a wider advertising market and a larger joint mixed-media audience, experts said. Cablevision has 3.1 million subscribers in the tri-state area.
In addition to Newsday's reach of 379,613 daily copies and 441,728 on Sundays, Cablevision is said to be particularly enthusiastic about the prospect of growing Newsday.com, which has 3.2 million unique visitors and 66 million monthly page views.
Cablevision will "own Long Island," a former Newsday executive said.
"I think it made sense to Dolan that one way for this to really work would be to have a three-legged communications group, with the same owner and the same director on Internet, hardcopy and cable," said a source familiar with the thinking of key Cablevision officials. "That would truly make it a Long Island communicator and give it the great strength of being able to access all of Long Island through three portals and hopefully, along the way, find ways to consolidate cost."
In addition to Newsday and amNewYork, the deal would also include Star Community Publishing, the largest chain of weekly shoppers and Pennysavers in the Northeast, sources said. Tribune would retain ownership of Newsday's Melville headquarters and other real estate. Tribune's stake in the venture would be less than 5 percent, which is sufficient to help defray considerable capital gains tax.